Industry Events We will be attending the Cambridge House Vancouver Resource Investment Conference January 24-25, 2016 If you would like to meet us at one of these shows, please contact us at marianne.jenkevice @peartreesecurities.com Upcoming Events Marianne Jenkevice Institutional Sales marianne.jenkevice @peartreesecurities.com 416.613.3848 x435 peartreesecurities.com Contact Us Follow Us on Twitter & LinkedIn Trent Mell, President & Head of Mining On January 14, 2016, the Canadian Mining Hall of Fame inducted five new members (see below). This is always a special occasion, as it allows us to come together as an industry and celebrate lifetime achievements. Perhaps more than usual, this year’s ceremony offered a welcome reprieve from our screens. Mines are Built over Decades, Markets are Made in a Day 2016 is off to a horrible start and few companies are feeling it as much as Freeport McMoran (NYSE:FCX), which saw its stock price drop nearly 40% in just over a week. Turn the clock back 18 months and the copper, oil and natural gas company had a stock price of over $38. Today it is trading at $4.35, for a 90% loss in value. With almost $20 billion in debt, a $5 billion market capitalization, deteriorating net income and weak operating cash flow, there are ample reasons for investor selling. Commodities are at 6-12 year lows and it is tempting to compare the current situation to 2008. Back then, the mining sector crashed from all-time highs, forcing many of us to quickly shutter operations to preserve cash. I will never forget heading to the site with a colleague to deliver the news to 350 miners that they were suddenly out of work. The outlook was uncertain but at the corporate level, we had balance sheets that could weather the storm. Treasuries were generally healthy and many of us had room to improve operating efficiencies and trim corporate structures that reflected a bull market. Fast forward to today and we have an industry that has largely been in recession mode for 4 years. Over that time, we have improved our operating margins and shrunk G&A, while treasuries and balance sheets are not as robust as they once were. Fortunately, Canadian operators are reaping the benefits of a 69 cent Canadian dollar and low energy prices. To that end, 2015 was PearTree’s best year yet in terms of deal flow and 2016 appears equally strong. However, as equity valuations tend to reflect US dollar commodity prices, the weak Canadian dollar offers little reprieve for explorers and developers. Issue Seven – January 2016 Perspective @PearTreeSec AME BC Roundup January 25-28, 2016 PDAC Convention March 6-9, 2016 USD CAD Gold $1,092.00/oz $1,583.00/oz Silver $13.94/oz $20.20/oz Copper $1.98/lb $2.87/lb Zinc $0.67/lb $0.97/lb Nickel $3.85/lb $5.58/lb Commodity Prices at a US$0.69 Canadian Dollar
Transcript
Industry EventsWe will be attending the Cambridge House Vancouver Resource Investment ConferenceJanuary 24-25, 2016
If you would like to meet us at one of these shows, please contact us at [email protected]
On January 14, 2016, the Canadian Mining Hall of Fame inducted five new members (see below). This is always a special occasion, as it allows us to come together as an industry and celebrate lifetime achievements. Perhaps more than usual, this year’s ceremony o�ered a welcome reprieve from our screens.
Mines are Built over Decades, Markets are Made in a Day
2016 is o� to a horrible start and few companies are feeling it as much as Freeport McMoran (NYSE:FCX), which saw its stock price drop nearly 40% in just over a week. Turn the clock back 18 months and the copper, oil and natural gas company had a stock price of over $38. Today it is trading at $4.35, for a 90% loss in value. With almost $20 billion in debt, a $5 billion market capitalization, deteriorating net income and weak operating cash flow, there are ample reasons for investor selling.
Commodities are at 6-12 year lows and it is tempting to compare the current situation to 2008. Back then, the mining sector crashed from all-time highs, forcing many of us to quickly shutter operations to preserve cash. I will never forget heading to the site with a colleague to deliver the news to 350 miners that they were suddenly out of work. The outlook was uncertain but at the corporate level, we had balance sheets that could weather the storm. Treasuries were generally healthy and many of us had room to improve operating e�ciencies and trim corporate structures that reflected a bull market. Fast forward to today and we have an industry that has largely been in recession mode for 4 years. Over that time, we have improved our operating margins and shrunk G&A, while treasuries and balance sheets are not as robust as they once were.
Fortunately, Canadian operators are reaping the benefits of a 69 cent Canadian dollar and low energy prices. To that end, 2015 was PearTree’s best year yet in terms of deal flow and 2016 appears equally strong. However, as equity valuations tend to reflect US dollar commodity prices, the weak Canadian dollar o�ers little reprieve for explorers and developers.
12,837m of definition drilling (29 holes) was completed within the upper portion of the Eau Claire deposit. Drilling and sampling results demonstrate both continuity and grade of gold-bearing structures, extending laterally and vertically beyond currently defined resource domains, and accessible by ramp. Significant assay intercepts include 3m @ 35 g/t Au (Hole 556), 2m @ 4 g/t Au (Hole 553), 2m @ 8 g/t Au (Hole 557), 4.5m @ 98 g/t Au (Hole 566), and 5.5m @ 20 g/t Au (Hole 572). Assays are pending for 10 drill holes. Infill sampling confirmed a high-grade interval from hole 131, which assayed 5m @ 6.65 g/t Au from within the JQ vein set at a depth of 66m. Notably, when combined with assay results from the adjacent P vein-set, a composite interval of 13.8m @ 6.75 g/t Au is determined. Expectation is that the 1,438 infill core samples should contribute in expanding current mineral resources that total 1.58M oz.. Optimization studies are currently being undertaken as part of the PEA, which remains on schedule for Q2/2016 and on budget ($0.6M).
Issue Seven – January 2016
US$12M in deferred payments in the form of a promissory 4% interest note secured against Rice Lake and other purchased assets. Rice Lake complex is a fully permitted operation consisting of three main deposits (P&P gold reserves of 0.45M oz., M&I mineral resources of 0.63M oz, and Inf. resources of 1.1M oz. Au) with over $375M in historical capital investments since 2007 that include extensive underground development and a fully functional 2,500 tpd milling facility.
KDX intends to implement at Rice Lake the same grade and dilution control methods it has applied to the narrow veined Fire Creek and Midas operations in Nevada. KDX has demonstrated operational expertise with the Midas deposit and should apply its acumen to mine for narrow-vein using underground mining techniques. It could also benefit from redeployment of certain equipment and from potential mining synergies with its existing operations in Nevada. By applying a more selective mining approach to the Rice Lake operation, KDX intends to reduce tonnage, minimize dilution, and focus on producing higher margin ounces.
KDX is also acquiring a 50% interest in the Tully gold project located near Timmins, Ontario, and approximately 43M common shares in SGX Resources Inc., (32% of the issued and outstanding SGX-V common shares).
BonTerra Resources Inc. (BTR-V)A Gladiator into the Urban Barry Arena – On January 12, 2016, BTR disclosed final assay results from holes BA-15-03 and BA-15-04 of its 2015 Phase 1 drill program (4 holes totaling 1,707m) on its 100% owned West Arena Gold Property (Gladiator Gold Project), to the SE of Windfall in the Barry-Urban sector. Recall BTR had reported drill results of 7.7m @ 7.2 g/t Au (hole B-15-02) from its 2015 Phase 1 Exploration Program. Results confirmed high-grade gold vein intercepts and potential expansion of the mineralized zones along strike and depth on the Spartacus Trend. Hole BA-15-01 cut the Main Zone with a gold intersection of 2.64m @ 14 g/t Au (estimated true width) at -160m depth, while hole BA-15-02 intercepted the Main Zone at -400m depth with 3.08m @ 7.2 g/t Au (estimated true width). Hole BA-15-03, 50m west of hole 2, encountered a broad lower gold grade zone within a mineralized felsic porphy-ritic intrusive (16m @ 0.4 g/t Au). Hole BA-15-04, located 50m to the east of drill hole BA-15-01, intercepted the Main Zone with up to 0.52m @ 8 g/t Au. The 2015 Phase 1 drill program targeted the plunge and strike extensions of the Gladiator Zone. The Spartacus Trend is identified as a NE trending shear zone primarily within mafic volcanic units that host local intrusions of syenite and gabbro. To date, the deposit has been drilled over a 500m strike length from surface and consists of a number of parallel, anastomosing, and intersecting steeply dipping shear zones. The 2016 exploration and drill program should consist of up to 25,000m, with a minimum of two drill rigs, to extend and expand the known Gladiator zones. A 3rd rig is set to explore the known and newly-discovered mineralized trends along strike, which have been further defined and extended by a recently completed ground geophysical program.
Oban Mining Corp. (OBM-T)Acquiring assets full steam and showing depth to Windfall – OBM, after acquiring Niogold (NOX-V), announced on January 13, 2016, initial results from recent drilling at the Windfall Lake gold project located in Urban Barry Township, Québec. Results from the ongoing 55,000m drill program have intersected significant new gold mineralization (potential new lenses) with
Company News – Canadian Exploration and Development Space:
In the News
Lake Shore Gold Corp. (LSG-T) Going for the Gap 144 – LSG reported full year and Q4/2015 production results on January 8, 2016. Total 2015 gold production was 183,300oz. sold, with Q4/15 at 42,000oz. sold, and achieved record annual mill throughput, processing 1,307,200 tonnes at an average grade of 4.4 g/t with average recoveries of 96.6%. LSG also released 2016 guidance with a first resource for 144 Gap Zone on track for Q1/16. 2016 guidance includes production of 170,000 – 180,000oz. with cash operating cost of US$650/oz. and AISC below US$950. Notably, cash and bullion totaled $100 million as of December 31, 2015, with LSG also having fully repaid the senior secured debt. Results imply that 2015 was another solid year with strong production, record mill throughput, and unit costs that compare favourably to target levels. LSG achieved considerable exploration success at the 144 Gap Zone and also acquired Temex Resources Corp.
Lake Shore Gold is a Canadian-based gold producer with operations based in the Timmins Gold Camp of Northern Ontario. The Company produces gold from two mines, Timmins West and Bell Creek, with material being delivered for processing to the Bell Creek Mill. In addition to current mining and milling operations, the Company also has a number of
Below are a few of the Canadian exploration and development companies we follow at PearTree. For more Analyst Notes please click here.
By Eric Lemieux, Mining & Exploration Analytics
highly prospective projects and exploration targets, all located in and around the Timmins Camp.
Kaminak Gold Corp. (KAM-T) Nothing better than a good Co�ee in the morning – On January 6, 2016, KAM announced the results of a Feasibility Study (FS) for its 100% owned Co�ee Gold Project, located 130km south of Dawson City in Yukon Territory, Canada. The FS suggests a robust, high margin, multi-year open pit mining and heap leach project, with a strong NPV and IRR at a gold price of US$1,150/oz. KAM is moving forward with mine permitting, with mine construction anticipated by mid-2018. With $28M, KAM is well positioned to advance the Co�ee project. The after-tax NPV5% stands at $455M, with an IRR of 37%. The proposed mine should operate over an initial 10-yr mine life, with average annual gold production in excess of 200,000oz. for the first five years and average annual life-of-mine gold production of 184,000oz. at head grade of 1.45 g/t Au. Initial capital expenditure to fund construction and commissioning is estimated at $317M, with a life-of-mine capital cost of $478M (including $60M in closure costs). The AISC is estimated to be US$550/oz. of gold produced. Probable Mineral Reserve stands at 2.157 Moz Au (46.4Mt @ 1.45 g/t Au), with average metallurgical gold recoveries of 86.3%.
The FS proposes four open pits mined by conventional shovel and truck methods, at a nominal ore mining rate of 5 MT per annum, with site accessed principally from Dawson City, Yukon, by way of a 214km single-lane gravel road with pullouts. The positive FS, prepared and led by JDS Energy and Mining Inc., solidly establishes the Co�ee Project as potentially one of the world’s best undeveloped gold projects by value and margin. With a rather simple, open pit, heap leach mining operation located in a favorable jurisdiction with strong social acceptability and local First Nations support, the project is rather well set to advance.
Klondex Mines Ltd. (KDX-T)Expanding into Canada with experienced eyes wide open – On December 17, 2015, KDX announced that it had entered into a definitive agreement to acquire the Rice Lake Mine and mill complex located near Bissett, Manitoba, for US$32M. The acquisition to be closed by Q2/2016 represents an option on a production ready gold asset in a top ranking mining jurisdiction. The purchase price is comprised of (i) US$20M in cash and (ii)
intercepts of 20.4m @ 7.04 g/t Au, 10m @7 g/t Au, and 3.7m @10 g/t Au (hole OBM-15-559); 4.7m @ 7.46 g/t Au (hole OBM-15-557); and 1m @18.15 g/t Au (hole OBM-15-554).This suggests zones below the Red Dog intrusion dyke and lateral extensions to the F27 Zone. Holes drilled below the Red Dog successfully tested 3 major ENE corridors of alteration and mineralization (FW-1, FW-3, FW-4) that are probable extensions of the known lenses of the Main Zone defined above the Red Dog (1m @ 8.09 g/t Au (FW-4)). Certain holes also extended known lenses (Caribou S1 lens was extended 30m by hole OBM-15-552 with 3m @5.7 g/t Au). The Urban-Barry area may host one of the largest remaining belts of under-explored felsic volcanic rocks in the Superior Province that have polymetallic, gold-rich massive sulfide mineralization potential. Oban should continue to pursue its aggressive diamond drilling program.
TerraX Minerals Inc. (TXR-V)Much smoke in the Core Gold Area – TXR announced on January 6, 2016, the discovery of 3 new areas with replacement style mineralization, following the summer surface exploration program, at its Yellowknife City Gold project. The Yellowknife City Gold Project encompasses approximately 116km2 of contiguous land immediately north, and now also south, of the City of Yellowknife in the Northwest Territories. The Core Gold Area encompasses the Crestaurum and Barney shears and recent work expands the Core Gold Area, with grab samples up to 133.5 g/t Au and 108 g/t Au in new quartz veins within newly discovered vein sets. These are Pinto South (~200m SE of the Pinto structure), JED area (west of the Barney Shear), and Shear 17/18 with polymetallic assays of 4.94 g/t Au, 51.9 g/t Ag, 1.24% Cu, and 1% Mo to the NE of the Ryan Lake pluton (12.35 g/t Au, 45 g/t Ag, 3.23% Pb, 1.31% Zn, and 0.53% Mo in the felsic portion). Another 3 new areas were identified as having alteration, structure, and stratigraphy that are similar to the Hebert-Brent area (11m @ 7.55 g/t Au in channel samples and 10.26m @ 3.69 g/t Au in drill hole TNB15-024), making them priority targets for continued exploration in 2016. These three new areas are: Hebert-Brent Southern Fault O�set, the Sericite Zone (1km NE) of Hebert-Brent, and the Townsite Formation. The Sericite Zone is a very much larger zone (300m by >500m) of intense sericite alteration with favourable stratigraphy and geochemistry. The Townsite Formation is a package of felsic intrusives and mafic, intermediate, felsic volcanics, as well as sediments identified proximal to both the Con and Giant deposits, and has had very little exploration. It abuts to the east the Jackson Lake Formation, a Temiskaming Formation-like equivalent, defining a Major Break making the Northbelt properties, with 23km of strike length of extensions of the shear system that hosts the high-grade Con and Giant gold mines, prime acreage within the Yellowknife gold district. The multiple shears are recognized hosts for gold deposits and, with innumerable gold showings, the Northbelt property may again make the prolific Yellowknife greenstone belt a world-class gold district.
Eastmain Resources Inc. (ER-T)Work on Eau Claire – ER announced on December 22, 2015, an update on exploration activities at its Clearwater Project, located in James Bay, Québec. The 2015 exploration program included definition drilling and infill drill-core sampling within the 450W zone of the Eau Claire deposit, as well as regional trenching. Work seems to have been successful in potentially expanding gold resources within Eau Claire deposit, as well as targeting other possible satellite open-pit resources that are drill-ready and 2km east of Eau Claire (SNL area).
At a macro level, the underlying causes of current market conditions are nothing like what we experienced in 2008. Today’s market volatility has nothing to do with asset bubbles or the stability of the global financial system. So where does that leave us? During his Canadian Mining Hall of Fame induction speech, Robert Friedland told the audience that this is the time where fortunes will be made. Where management teams and inves-tors alike can position themselves for the next cycle. This is not the time to be brash or foolish. Strong management teams with good assets and a long term perspective can position them-selves to thrive as conditions improve.
The investor’s challenge is not to pick the market bottom but to discern who the winners will be. Not today but heading into the next bull cycle.
CANADIAN MINING
HALL OF FAME INDUCTEES
PearTree would like to congratulate this year’s Mining Hall of Fame inductees
Stewart L. BlussonJ. Keith BrimacombeRobert M. Friedland
12,837m of definition drilling (29 holes) was completed within the upper portion of the Eau Claire deposit. Drilling and sampling results demonstrate both continuity and grade of gold-bearing structures, extending laterally and vertically beyond currently defined resource domains, and accessible by ramp. Significant assay intercepts include 3m @ 35 g/t Au (Hole 556), 2m @ 4 g/t Au (Hole 553), 2m @ 8 g/t Au (Hole 557), 4.5m @ 98 g/t Au (Hole 566), and 5.5m @ 20 g/t Au (Hole 572). Assays are pending for 10 drill holes. Infill sampling confirmed a high-grade interval from hole 131, which assayed 5m @ 6.65 g/t Au from within the JQ vein set at a depth of 66m. Notably, when combined with assay results from the adjacent P vein-set, a composite interval of 13.8m @ 6.75 g/t Au is determined. Expectation is that the 1,438 infill core samples should contribute in expanding current mineral resources that total 1.58M oz.. Optimization studies are currently being undertaken as part of the PEA, which remains on schedule for Q2/2016 and on budget ($0.6M).
PearTree Perspective
US$12M in deferred payments in the form of a promissory 4% interest note secured against Rice Lake and other purchased assets. Rice Lake complex is a fully permitted operation consisting of three main deposits (P&P gold reserves of 0.45M oz., M&I mineral resources of 0.63M oz, and Inf. resources of 1.1M oz. Au) with over $375M in historical capital investments since 2007 that include extensive underground development and a fully functional 2,500 tpd milling facility.
KDX intends to implement at Rice Lake the same grade and dilution control methods it has applied to the narrow veined Fire Creek and Midas operations in Nevada. KDX has demonstrated operational expertise with the Midas deposit and should apply its acumen to mine for narrow-vein using underground mining techniques. It could also benefit from redeployment of certain equipment and from potential mining synergies with its existing operations in Nevada. By applying a more selective mining approach to the Rice Lake operation, KDX intends to reduce tonnage, minimize dilution, and focus on producing higher margin ounces.
KDX is also acquiring a 50% interest in the Tully gold project located near Timmins, Ontario, and approximately 43M common shares in SGX Resources Inc., (32% of the issued and outstanding SGX-V common shares).
BonTerra Resources Inc. (BTR-V)A Gladiator into the Urban Barry Arena – On January 12, 2016, BTR disclosed final assay results from holes BA-15-03 and BA-15-04 of its 2015 Phase 1 drill program (4 holes totaling 1,707m) on its 100% owned West Arena Gold Property (Gladiator Gold Project), to the SE of Windfall in the Barry-Urban sector. Recall BTR had reported drill results of 7.7m @ 7.2 g/t Au (hole B-15-02) from its 2015 Phase 1 Exploration Program. Results confirmed high-grade gold vein intercepts and potential expansion of the mineralized zones along strike and depth on the Spartacus Trend. Hole BA-15-01 cut the Main Zone with a gold intersection of 2.64m @ 14 g/t Au (estimated true width) at -160m depth, while hole BA-15-02 intercepted the Main Zone at -400m depth with 3.08m @ 7.2 g/t Au (estimated true width). Hole BA-15-03, 50m west of hole 2, encountered a broad lower gold grade zone within a mineralized felsic porphy-ritic intrusive (16m @ 0.4 g/t Au). Hole BA-15-04, located 50m to the east of drill hole BA-15-01, intercepted the Main Zone with up to 0.52m @ 8 g/t Au. The 2015 Phase 1 drill program targeted the plunge and strike extensions of the Gladiator Zone. The Spartacus Trend is identified as a NE trending shear zone primarily within mafic volcanic units that host local intrusions of syenite and gabbro. To date, the deposit has been drilled over a 500m strike length from surface and consists of a number of parallel, anastomosing, and intersecting steeply dipping shear zones. The 2016 exploration and drill program should consist of up to 25,000m, with a minimum of two drill rigs, to extend and expand the known Gladiator zones. A 3rd rig is set to explore the known and newly-discovered mineralized trends along strike, which have been further defined and extended by a recently completed ground geophysical program.
Oban Mining Corp. (OBM-T)Acquiring assets full steam and showing depth to Windfall – OBM, after acquiring Niogold (NOX-V), announced on January 13, 2016, initial results from recent drilling at the Windfall Lake gold project located in Urban Barry Township, Québec. Results from the ongoing 55,000m drill program have intersected significant new gold mineralization (potential new lenses) with
Lake Shore Gold Corp. (LSG-T) Going for the Gap 144 – LSG reported full year and Q4/2015 production results on January 8, 2016. Total 2015 gold production was 183,300oz. sold, with Q4/15 at 42,000oz. sold, and achieved record annual mill throughput, processing 1,307,200 tonnes at an average grade of 4.4 g/t with average recoveries of 96.6%. LSG also released 2016 guidance with a first resource for 144 Gap Zone on track for Q1/16. 2016 guidance includes production of 170,000 – 180,000oz. with cash operating cost of US$650/oz. and AISC below US$950. Notably, cash and bullion totaled $100 million as of December 31, 2015, with LSG also having fully repaid the senior secured debt. Results imply that 2015 was another solid year with strong production, record mill throughput, and unit costs that compare favourably to target levels. LSG achieved considerable exploration success at the 144 Gap Zone and also acquired Temex Resources Corp.
Lake Shore Gold is a Canadian-based gold producer with operations based in the Timmins Gold Camp of Northern Ontario. The Company produces gold from two mines, Timmins West and Bell Creek, with material being delivered for processing to the Bell Creek Mill. In addition to current mining and milling operations, the Company also has a number of
highly prospective projects and exploration targets, all located in and around the Timmins Camp.
Kaminak Gold Corp. (KAM-T) Nothing better than a good Co�ee in the morning – On January 6, 2016, KAM announced the results of a Feasibility Study (FS) for its 100% owned Co�ee Gold Project, located 130km south of Dawson City in Yukon Territory, Canada. The FS suggests a robust, high margin, multi-year open pit mining and heap leach project, with a strong NPV and IRR at a gold price of US$1,150/oz. KAM is moving forward with mine permitting, with mine construction anticipated by mid-2018. With $28M, KAM is well positioned to advance the Co�ee project. The after-tax NPV5% stands at $455M, with an IRR of 37%. The proposed mine should operate over an initial 10-yr mine life, with average annual gold production in excess of 200,000oz. for the first five years and average annual life-of-mine gold production of 184,000oz. at head grade of 1.45 g/t Au. Initial capital expenditure to fund construction and commissioning is estimated at $317M, with a life-of-mine capital cost of $478M (including $60M in closure costs). The AISC is estimated to be US$550/oz. of gold produced. Probable Mineral Reserve stands at 2.157 Moz Au (46.4Mt @ 1.45 g/t Au), with average metallurgical gold recoveries of 86.3%.
The FS proposes four open pits mined by conventional shovel and truck methods, at a nominal ore mining rate of 5 MT per annum, with site accessed principally from Dawson City, Yukon, by way of a 214km single-lane gravel road with pullouts. The positive FS, prepared and led by JDS Energy and Mining Inc., solidly establishes the Co�ee Project as potentially one of the world’s best undeveloped gold projects by value and margin. With a rather simple, open pit, heap leach mining operation located in a favorable jurisdiction with strong social acceptability and local First Nations support, the project is rather well set to advance.
Klondex Mines Ltd. (KDX-T)Expanding into Canada with experienced eyes wide open – On December 17, 2015, KDX announced that it had entered into a definitive agreement to acquire the Rice Lake Mine and mill complex located near Bissett, Manitoba, for US$32M. The acquisition to be closed by Q2/2016 represents an option on a production ready gold asset in a top ranking mining jurisdiction. The purchase price is comprised of (i) US$20M in cash and (ii)
Issue Seven – January 2016
intercepts of 20.4m @ 7.04 g/t Au, 10m @7 g/t Au, and 3.7m @10 g/t Au (hole OBM-15-559); 4.7m @ 7.46 g/t Au (hole OBM-15-557); and 1m @18.15 g/t Au (hole OBM-15-554).This suggests zones below the Red Dog intrusion dyke and lateral extensions to the F27 Zone. Holes drilled below the Red Dog successfully tested 3 major ENE corridors of alteration and mineralization (FW-1, FW-3, FW-4) that are probable extensions of the known lenses of the Main Zone defined above the Red Dog (1m @ 8.09 g/t Au (FW-4)). Certain holes also extended known lenses (Caribou S1 lens was extended 30m by hole OBM-15-552 with 3m @5.7 g/t Au). The Urban-Barry area may host one of the largest remaining belts of under-explored felsic volcanic rocks in the Superior Province that have polymetallic, gold-rich massive sulfide mineralization potential. Oban should continue to pursue its aggressive diamond drilling program.
TerraX Minerals Inc. (TXR-V)Much smoke in the Core Gold Area – TXR announced on January 6, 2016, the discovery of 3 new areas with replacement style mineralization, following the summer surface exploration program, at its Yellowknife City Gold project. The Yellowknife City Gold Project encompasses approximately 116km2 of contiguous land immediately north, and now also south, of the City of Yellowknife in the Northwest Territories. The Core Gold Area encompasses the Crestaurum and Barney shears and recent work expands the Core Gold Area, with grab samples up to 133.5 g/t Au and 108 g/t Au in new quartz veins within newly discovered vein sets. These are Pinto South (~200m SE of the Pinto structure), JED area (west of the Barney Shear), and Shear 17/18 with polymetallic assays of 4.94 g/t Au, 51.9 g/t Ag, 1.24% Cu, and 1% Mo to the NE of the Ryan Lake pluton (12.35 g/t Au, 45 g/t Ag, 3.23% Pb, 1.31% Zn, and 0.53% Mo in the felsic portion). Another 3 new areas were identified as having alteration, structure, and stratigraphy that are similar to the Hebert-Brent area (11m @ 7.55 g/t Au in channel samples and 10.26m @ 3.69 g/t Au in drill hole TNB15-024), making them priority targets for continued exploration in 2016. These three new areas are: Hebert-Brent Southern Fault O�set, the Sericite Zone (1km NE) of Hebert-Brent, and the Townsite Formation. The Sericite Zone is a very much larger zone (300m by >500m) of intense sericite alteration with favourable stratigraphy and geochemistry. The Townsite Formation is a package of felsic intrusives and mafic, intermediate, felsic volcanics, as well as sediments identified proximal to both the Con and Giant deposits, and has had very little exploration. It abuts to the east the Jackson Lake Formation, a Temiskaming Formation-like equivalent, defining a Major Break making the Northbelt properties, with 23km of strike length of extensions of the shear system that hosts the high-grade Con and Giant gold mines, prime acreage within the Yellowknife gold district. The multiple shears are recognized hosts for gold deposits and, with innumerable gold showings, the Northbelt property may again make the prolific Yellowknife greenstone belt a world-class gold district.
Eastmain Resources Inc. (ER-T)Work on Eau Claire – ER announced on December 22, 2015, an update on exploration activities at its Clearwater Project, located in James Bay, Québec. The 2015 exploration program included definition drilling and infill drill-core sampling within the 450W zone of the Eau Claire deposit, as well as regional trenching. Work seems to have been successful in potentially expanding gold resources within Eau Claire deposit, as well as targeting other possible satellite open-pit resources that are drill-ready and 2km east of Eau Claire (SNL area).
Equity Research
Detour Gold (DGC-T)Zone 58N avance remarquablement! – On December 17, 2015, DGC provided final drill results from its 2015 summer drilling program in the Lower Detour Deformation Zone which targeted Zone 58N. An infill drilling program at 50m spacing was conducted to test the continuity and extent of the gold mineral-ization within Zone 58N located ~6km south of its flagship Detour Lake gold mine. The results from the last 21 holes totaling 15,606m continue to demonstrate the good continuity of the gold mineral-ization at depth. Significant intercepts are 14m @ 4.35 g/t Au (DLD-15-177), 4.3m @ 23.32 g/t Au (DLD-15-178), 4.3m @ 17.26 g/t Au (DLD-15-179), 8m @ 10.02 g/t Au (DLD-15-188), 4.4m @ 14.01 g/t Au (DLD-15-181), and 10.6m @ 6.48 g/t Au (DLD-15-182W (uncut gold assays)). Diamond drill results from the 2015 summer drilling program at Lower Detour suggest the 58N mineralized system is fertile, remains very much open at depth, and is a potential significant high-grade gold deposit at the 58N Zone. Detour plans to continue the drilling campaign this winter with an infill and step-out program of up to 75,000m.
12,837m of definition drilling (29 holes) was completed within the upper portion of the Eau Claire deposit. Drilling and sampling results demonstrate both continuity and grade of gold-bearing structures, extending laterally and vertically beyond currently defined resource domains, and accessible by ramp. Significant assay intercepts include 3m @ 35 g/t Au (Hole 556), 2m @ 4 g/t Au (Hole 553), 2m @ 8 g/t Au (Hole 557), 4.5m @ 98 g/t Au (Hole 566), and 5.5m @ 20 g/t Au (Hole 572). Assays are pending for 10 drill holes. Infill sampling confirmed a high-grade interval from hole 131, which assayed 5m @ 6.65 g/t Au from within the JQ vein set at a depth of 66m. Notably, when combined with assay results from the adjacent P vein-set, a composite interval of 13.8m @ 6.75 g/t Au is determined. Expectation is that the 1,438 infill core samples should contribute in expanding current mineral resources that total 1.58M oz.. Optimization studies are currently being undertaken as part of the PEA, which remains on schedule for Q2/2016 and on budget ($0.6M).
US$12M in deferred payments in the form of a promissory 4% interest note secured against Rice Lake and other purchased assets. Rice Lake complex is a fully permitted operation consisting of three main deposits (P&P gold reserves of 0.45M oz., M&I mineral resources of 0.63M oz, and Inf. resources of 1.1M oz. Au) with over $375M in historical capital investments since 2007 that include extensive underground development and a fully functional 2,500 tpd milling facility.
KDX intends to implement at Rice Lake the same grade and dilution control methods it has applied to the narrow veined Fire Creek and Midas operations in Nevada. KDX has demonstrated operational expertise with the Midas deposit and should apply its acumen to mine for narrow-vein using underground mining techniques. It could also benefit from redeployment of certain equipment and from potential mining synergies with its existing operations in Nevada. By applying a more selective mining approach to the Rice Lake operation, KDX intends to reduce tonnage, minimize dilution, and focus on producing higher margin ounces.
KDX is also acquiring a 50% interest in the Tully gold project located near Timmins, Ontario, and approximately 43M common shares in SGX Resources Inc., (32% of the issued and outstanding SGX-V common shares).
BonTerra Resources Inc. (BTR-V)A Gladiator into the Urban Barry Arena – On January 12, 2016, BTR disclosed final assay results from holes BA-15-03 and BA-15-04 of its 2015 Phase 1 drill program (4 holes totaling 1,707m) on its 100% owned West Arena Gold Property (Gladiator Gold Project), to the SE of Windfall in the Barry-Urban sector. Recall BTR had reported drill results of 7.7m @ 7.2 g/t Au (hole B-15-02) from its 2015 Phase 1 Exploration Program. Results confirmed high-grade gold vein intercepts and potential expansion of the mineralized zones along strike and depth on the Spartacus Trend. Hole BA-15-01 cut the Main Zone with a gold intersection of 2.64m @ 14 g/t Au (estimated true width) at -160m depth, while hole BA-15-02 intercepted the Main Zone at -400m depth with 3.08m @ 7.2 g/t Au (estimated true width). Hole BA-15-03, 50m west of hole 2, encountered a broad lower gold grade zone within a mineralized felsic porphy-ritic intrusive (16m @ 0.4 g/t Au). Hole BA-15-04, located 50m to the east of drill hole BA-15-01, intercepted the Main Zone with up to 0.52m @ 8 g/t Au. The 2015 Phase 1 drill program targeted the plunge and strike extensions of the Gladiator Zone. The Spartacus Trend is identified as a NE trending shear zone primarily within mafic volcanic units that host local intrusions of syenite and gabbro. To date, the deposit has been drilled over a 500m strike length from surface and consists of a number of parallel, anastomosing, and intersecting steeply dipping shear zones. The 2016 exploration and drill program should consist of up to 25,000m, with a minimum of two drill rigs, to extend and expand the known Gladiator zones. A 3rd rig is set to explore the known and newly-discovered mineralized trends along strike, which have been further defined and extended by a recently completed ground geophysical program.
Oban Mining Corp. (OBM-T)Acquiring assets full steam and showing depth to Windfall – OBM, after acquiring Niogold (NOX-V), announced on January 13, 2016, initial results from recent drilling at the Windfall Lake gold project located in Urban Barry Township, Québec. Results from the ongoing 55,000m drill program have intersected significant new gold mineralization (potential new lenses) with
Lake Shore Gold Corp. (LSG-T) Going for the Gap 144 – LSG reported full year and Q4/2015 production results on January 8, 2016. Total 2015 gold production was 183,300oz. sold, with Q4/15 at 42,000oz. sold, and achieved record annual mill throughput, processing 1,307,200 tonnes at an average grade of 4.4 g/t with average recoveries of 96.6%. LSG also released 2016 guidance with a first resource for 144 Gap Zone on track for Q1/16. 2016 guidance includes production of 170,000 – 180,000oz. with cash operating cost of US$650/oz. and AISC below US$950. Notably, cash and bullion totaled $100 million as of December 31, 2015, with LSG also having fully repaid the senior secured debt. Results imply that 2015 was another solid year with strong production, record mill throughput, and unit costs that compare favourably to target levels. LSG achieved considerable exploration success at the 144 Gap Zone and also acquired Temex Resources Corp.
Lake Shore Gold is a Canadian-based gold producer with operations based in the Timmins Gold Camp of Northern Ontario. The Company produces gold from two mines, Timmins West and Bell Creek, with material being delivered for processing to the Bell Creek Mill. In addition to current mining and milling operations, the Company also has a number of
highly prospective projects and exploration targets, all located in and around the Timmins Camp.
Kaminak Gold Corp. (KAM-T) Nothing better than a good Co�ee in the morning – On January 6, 2016, KAM announced the results of a Feasibility Study (FS) for its 100% owned Co�ee Gold Project, located 130km south of Dawson City in Yukon Territory, Canada. The FS suggests a robust, high margin, multi-year open pit mining and heap leach project, with a strong NPV and IRR at a gold price of US$1,150/oz. KAM is moving forward with mine permitting, with mine construction anticipated by mid-2018. With $28M, KAM is well positioned to advance the Co�ee project. The after-tax NPV5% stands at $455M, with an IRR of 37%. The proposed mine should operate over an initial 10-yr mine life, with average annual gold production in excess of 200,000oz. for the first five years and average annual life-of-mine gold production of 184,000oz. at head grade of 1.45 g/t Au. Initial capital expenditure to fund construction and commissioning is estimated at $317M, with a life-of-mine capital cost of $478M (including $60M in closure costs). The AISC is estimated to be US$550/oz. of gold produced. Probable Mineral Reserve stands at 2.157 Moz Au (46.4Mt @ 1.45 g/t Au), with average metallurgical gold recoveries of 86.3%.
The FS proposes four open pits mined by conventional shovel and truck methods, at a nominal ore mining rate of 5 MT per annum, with site accessed principally from Dawson City, Yukon, by way of a 214km single-lane gravel road with pullouts. The positive FS, prepared and led by JDS Energy and Mining Inc., solidly establishes the Co�ee Project as potentially one of the world’s best undeveloped gold projects by value and margin. With a rather simple, open pit, heap leach mining operation located in a favorable jurisdiction with strong social acceptability and local First Nations support, the project is rather well set to advance.
Klondex Mines Ltd. (KDX-T)Expanding into Canada with experienced eyes wide open – On December 17, 2015, KDX announced that it had entered into a definitive agreement to acquire the Rice Lake Mine and mill complex located near Bissett, Manitoba, for US$32M. The acquisition to be closed by Q2/2016 represents an option on a production ready gold asset in a top ranking mining jurisdiction. The purchase price is comprised of (i) US$20M in cash and (ii)
This newsletter is dedicated to providing insight and analysis on Canadian mineral exploration and development stories. We welcome your feedback.
PearTree Securities is the largest provider of mining flow through capital in Canada. As an exempt market dealer and portfolio manager, PearTree Securities has approximately $250 million available for investments annually.
For more details:
19-1-2016 | Integra Gold Corp. (ICG-V), Detour Gold Corp. (DGC-T), Balmoral Resource Ltd. (BAR-T), Midland Exploration Inc. (MD-V)Hot Spots in and near Québec
Event: Recent updates and results from certain issuers with Québec based projects.
Issue Seven – January 2016PearTree Perspective
Integra Gold Corp. (ICG-V), Detour Gold Corp. (DGC-T), Balmoral Resource Ltd. (BAR-T), Midland Exploration Inc. (MD-V)Hot Spots in and near Québec – Certain well-funded exploration and development companies in Québec should be well positioned in 2016 with an active program for the year. We highlight companies such as Integra Gold Corp. (ICG-V, Balmoral Resources Inc (BAR-T), Adventure Gold Inc (AGE-V), Midland Exploration Inc. (MD-V), as well as Bonterra Resources Inc. (BTR-V) and Oban Mining Corporation (OBM-T) that shall be well positioned to deliver.
On January 13, 2016, Integra disclosed high impact 2015 drilling results demonstrating a certain degree of periodicity to the fertile stacked/subparallel C-type structures and robustness of the geological model. Integra has been quite aggressive on advancing its flagship Triangle deposit and a drill program has been re-initiated with ~90,000m to 100,000m of drilling in 2016.
We continue to believe that the Québec Detour Trend, located at the northern end of the prolific Abitibi greenstone belt, could arise as a hot-spot. Over 10,000m of winter drilling by Midland and Adventure Gold (with their partner SOQUEM), as well as Balmoral are expected to be completed. Diamond drill results from Detour Gold Corp. (DGC-T) at Lower Detour suggest an emerging significant high-grade gold deposit at the 58N Zone. On January 15, 2016, Detour Gold announced Q4/2015 record gold production of 146,417oz. and that Detour shall complete 40,000m of drilling in the phase 1 winter 2016 drill program on the Lower Detour.
Stay in touch with PearTree SecuritiesPlease click below to continue receiving our information
SUBSCRIBE
intercepts of 20.4m @ 7.04 g/t Au, 10m @7 g/t Au, and 3.7m @10 g/t Au (hole OBM-15-559); 4.7m @ 7.46 g/t Au (hole OBM-15-557); and 1m @18.15 g/t Au (hole OBM-15-554).This suggests zones below the Red Dog intrusion dyke and lateral extensions to the F27 Zone. Holes drilled below the Red Dog successfully tested 3 major ENE corridors of alteration and mineralization (FW-1, FW-3, FW-4) that are probable extensions of the known lenses of the Main Zone defined above the Red Dog (1m @ 8.09 g/t Au (FW-4)). Certain holes also extended known lenses (Caribou S1 lens was extended 30m by hole OBM-15-552 with 3m @5.7 g/t Au). The Urban-Barry area may host one of the largest remaining belts of under-explored felsic volcanic rocks in the Superior Province that have polymetallic, gold-rich massive sulfide mineralization potential. Oban should continue to pursue its aggressive diamond drilling program.
TerraX Minerals Inc. (TXR-V)Much smoke in the Core Gold Area – TXR announced on January 6, 2016, the discovery of 3 new areas with replacement style mineralization, following the summer surface exploration program, at its Yellowknife City Gold project. The Yellowknife City Gold Project encompasses approximately 116km2 of contiguous land immediately north, and now also south, of the City of Yellowknife in the Northwest Territories. The Core Gold Area encompasses the Crestaurum and Barney shears and recent work expands the Core Gold Area, with grab samples up to 133.5 g/t Au and 108 g/t Au in new quartz veins within newly discovered vein sets. These are Pinto South (~200m SE of the Pinto structure), JED area (west of the Barney Shear), and Shear 17/18 with polymetallic assays of 4.94 g/t Au, 51.9 g/t Ag, 1.24% Cu, and 1% Mo to the NE of the Ryan Lake pluton (12.35 g/t Au, 45 g/t Ag, 3.23% Pb, 1.31% Zn, and 0.53% Mo in the felsic portion). Another 3 new areas were identified as having alteration, structure, and stratigraphy that are similar to the Hebert-Brent area (11m @ 7.55 g/t Au in channel samples and 10.26m @ 3.69 g/t Au in drill hole TNB15-024), making them priority targets for continued exploration in 2016. These three new areas are: Hebert-Brent Southern Fault O�set, the Sericite Zone (1km NE) of Hebert-Brent, and the Townsite Formation. The Sericite Zone is a very much larger zone (300m by >500m) of intense sericite alteration with favourable stratigraphy and geochemistry. The Townsite Formation is a package of felsic intrusives and mafic, intermediate, felsic volcanics, as well as sediments identified proximal to both the Con and Giant deposits, and has had very little exploration. It abuts to the east the Jackson Lake Formation, a Temiskaming Formation-like equivalent, defining a Major Break making the Northbelt properties, with 23km of strike length of extensions of the shear system that hosts the high-grade Con and Giant gold mines, prime acreage within the Yellowknife gold district. The multiple shears are recognized hosts for gold deposits and, with innumerable gold showings, the Northbelt property may again make the prolific Yellowknife greenstone belt a world-class gold district.
Eastmain Resources Inc. (ER-T)Work on Eau Claire – ER announced on December 22, 2015, an update on exploration activities at its Clearwater Project, located in James Bay, Québec. The 2015 exploration program included definition drilling and infill drill-core sampling within the 450W zone of the Eau Claire deposit, as well as regional trenching. Work seems to have been successful in potentially expanding gold resources within Eau Claire deposit, as well as targeting other possible satellite open-pit resources that are drill-ready and 2km east of Eau Claire (SNL area).
For more details: 12-21-2015 | Detour Gold Corp (DGC-T)Zone 58N set to advance remarkably
Event: Detour Gold announced final drilling results from the 58N Zone.
